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I would consider The Wealth of Nations (published in 1776) as required reading for anyone who truly wants to understand both American History and American Economics. This new edition (mentioned here) is edited by Edwin Cannan and includes all introductions, notes, and indexes as included in the original edition and others that are relevant to today. The aphorisms of history and economics found in this book stand as true today as they did back then.
In the late 1700s, this book was a landmark of unparalleled thought! It is the first scientific bit of evidence for organized economy. As such, it replaces all previous economic thought. Adam Smith begins by stating his many theories about capital, growth, change, etc. Let's take a look at some of his ideas about important economic principles and other studies. (But I must begin with my favorite quote. It is about Science.)
Science is the great antidote to the poison of enthusiasm and superstition.
Remember that the world of 1776 was still steeped in superstition in many ways. Sickness was still quite a conundrum. Remember how Ben Franklin finally suggested that people steer clear of "bad smells."Why is this? Science! It is Adam Smith here who actually names the reasoning behind it.
Of the Importance of Ingenuity and Challenge:
The man whose whole life is spent in performing a few simple operations ... has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.
Ah, Smith tells us the importance of exercising our minds! We are STILL desperately trying to do this today, ... trying to keep our minds sharp as we age. Here he puts both the scientific and economic slant on it. If a task is simply a factory-esque repetition, then the mind will not be stimulated.
Of Price, Profit, and Wages:
In regards to the price of commodities, the rise of wages operates as simple interest does, the rise of profit operates like compound interest. Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.
Finally we get to the meat of Smith's arguments: Economics (and specifically the ETHICS involved). The common debate over higher wages / higher prices is ever-present here, as is the idea of compounding interest!
In conclusion, remember that Adam Smith influenced the greats, such as Alexander Hamilton! Economists listened. Governments listened. Businesses listened. Further, if we pick it up again and read it today, we can see the dark side of business that still exists in our economy and in the GLOBAL economy!
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